Javier F. and Eldi M. Barbosa are married and live at 9540 Maple Leaf Drive, Gaitherburg, MD 20852. They file a joint return and are calendar year, cash basis taxpayers.

Javier F. and Eldi M. Barbosa are married and live at 9540 Maple Leaf Drive, Gaitherburg, MD 20852. They file a joint return and are calendar year, cash basis taxpayers.

1. Javier is a self-employed accountant (professional activity code is 541213). He maintains an office at 123 SE Wisconsin Avenue, Bethesda, MD. 20849. He shares the suite with several other professionals and has no employees. A receptionist handles all calls and is provided by the landlord as part of the services offered to tenants. Javier’s work-related expenses for 2014 are as follows:

Office rent $9,800

Utilities 3,000

Accounting services 1,200

Office expenses (supplies, use of copier, etc.) 1,100

Legal services (see item 9. below) 300

State and local license fees 900

Renter’s insurance (covers personal liability, casualty, theft) 1,500

Replacement of reception room furnishings (6/5/2014) 2,200

Professional dues and subscriptions to trade publications 600

Business lunches 1,400

Contribution to H.R. 10 (Keogh) plan 4,000

Medical insurance premiums 6,000

The business meals Javier paid for were to entertain various visiting executives from the clients he does business with. As is the case with all of Javier’s business transactions, the lunches are properly documented and supported by receipts. Because the reception room furnishings were looking shabby, Javier and his suite-mates had them replaced. The $2,200 Javier spent was his share (i.e., a sofa and coffee table) of the cost. Javier follows a policy of avoiding depreciation by utilizing the Section 179 election to expense assets. All of Javier’s office equipment (e.g., desk, chairs, file cabinets, computer, etc.) has previously been expensed. Of 16,000 total miles in 2014, Javier drives his car (a Ford Explorer purchased on 6/1/2012) 13,400 miles for business (not including commuting) and has business parking and toll charges of $310. The Barbosas use the automatic mileage method of claiming automobile expenses.

2. Eldi is an occupational therapist employed on a part-time basis by Therapy Consultants, Inc. Her employer does not provide her with an office, and she has no separate office in her home. She does, however, maintain her business records at home and lists it as her business address. After receiving her assignments by phone, she drives her car Mazda 626 (purchased on 7/1/2009 directly to the residence of the patient. Therapy Consultants, Inc. requires all of its therapists to wear uniforms while on duty. As Eldi is not a full-time employee, she is not covered by her employer’s health or retirement plans. Eldi’s work-related expenses for 2014 appear below:

Explanation & Answer

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